Returns are a cost of doing business on marketplaces. Every operator knows this. But the difference between a 5% return rate and a 15% return rate on the same product is often not the product itself. It is how the listing is built, how the product is packaged, how expectations are set, and how return data is analyzed and acted on.
This post breaks down what marketplace operators can actually control when it comes to returns, what they cannot, and where to focus effort to keep return rates in the range that allows a product to remain profitable.
The Return Policy Reality
Before discussing strategy, it is important to understand the baseline: marketplace return policies are set by the marketplace, not by the seller. On Amazon and Walmart, buyers can return most products within 30 days for any reason. In many categories, Amazon extends this to 90 days during the holiday season. Some categories, like clothing and shoes on Amazon, allow free return shipping regardless of the reason.
This is not negotiable. If you sell on these platforms, you accept their return policies. The return window, the return reasons available to the buyer, and the refund process are all controlled by the marketplace. Sellers who spend energy fighting individual returns or trying to find workarounds to restrict returns are wasting time that should be spent on reducing return rates through operational improvements.
Amazon's return framework: Buyers can return items within 30 days of delivery for most categories. Amazon handles the return logistics for FBA orders, including issuing refunds, often before the item is even shipped back. Sellers receive the returned inventory in various conditions, from unopened to clearly used. Amazon decides whether the item is sellable, unsellable, or damaged, and the seller has limited ability to dispute that determination.
Walmart's return framework: Walmart Marketplace offers a similar 30-day return window. For items fulfilled through WFS (Walmart Fulfillment Services), Walmart handles return processing. The seller can set return rules for seller-fulfilled items, but restrictive return policies negatively impact listing visibility and Buy Box eligibility.
Understanding these frameworks is the starting point for any returns management strategy. You cannot change the rules. You can only optimize within them.
What You Can Control
Listing Accuracy
The single most impactful thing an operator can do to reduce returns is make the listing accurate. This sounds obvious, but the gap between what a listing communicates and what a buyer receives is the root cause of a large percentage of marketplace returns.
Common listing accuracy problems that drive returns:
- Incorrect dimensions or weight. A product that appears larger in photos than it actually is will generate "item not as described" returns. Include exact measurements in bullet points and in A+ content.
- Misleading images. Lifestyle photos that show accessories or complementary items not included with the product. Every image should make it clear what is and is not included in the purchase.
- Vague or incomplete descriptions. A bullet point that says "great for everyday use" tells the buyer nothing. A bullet point that says "18-ounce capacity, fits standard cup holders, hand wash only" sets accurate expectations.
- Missing compatibility information. If a product is designed for a specific model, size, or use case, state it explicitly. "Compatible with Series X models manufactured after 2022" prevents returns from buyers who assumed universal compatibility.
Operators managing marketplace operations and fulfillment should audit every listing for accuracy before launch and review return reason data monthly to identify recurring issues that point to listing problems.
Product Quality and Consistency
Returns caused by genuine product defects are a manufacturing problem, not a marketplace problem. But the operator's role in quality control matters more than most brands realize.
When inventory arrives at a prep facility or warehouse, inbound inspection catches problems before they reach the customer. A batch of products with inconsistent labeling, damaged packaging, or missing components generates returns that could have been prevented with a 30-second visual inspection during prep.
The standard should be: every unit that ships to a customer or to a fulfillment center has been visually inspected for obvious defects. This does not mean opening and testing every unit. It means checking for damaged boxes, missing shrink wrap, incorrect labeling, and obvious cosmetic issues. The cost of catching a defective unit at the warehouse is a fraction of the cost of a customer return.
Packaging
Packaging serves two purposes on marketplaces: protecting the product during shipping and setting buyer expectations when the package arrives.
For FBA, the product goes through Amazon's fulfillment process, which involves conveyor belts, sorting, and placement in shipping boxes that may or may not be appropriately sized. If your product packaging cannot withstand being handled roughly, it will arrive damaged, and the buyer will return it.
Practical packaging guidelines for marketplace fulfillment:
- Products should survive a 3-foot drop test in their packaging
- Liquids need secondary containment (bag or wrap) in case of leaks
- Glass or fragile items need additional cushioning beyond what the retail package provides
- The unboxing experience should match the price point — a $50 product arriving in a plain brown box with no branding feels wrong to the buyer, even if the product itself is fine
For brands that partner with a marketplace distribution operator, packaging assessment should be part of the onboarding process. The operator should flag packaging that is likely to result in damage-related returns and recommend improvements before the first unit ships.
Setting Expectations Through Content
Beyond basic listing accuracy, the content strategy around a product can proactively address common return reasons. If your return data shows that 20% of returns cite "did not match expectations," your content is not doing its job.
Strategies that work:
- Comparison charts in A+ content. If you sell multiple sizes or variants, a clear comparison chart helps buyers choose correctly the first time.
- Video content. A 30-second product video showing the item in use, in actual hands, with realistic lighting, does more to set expectations than 10 photos.
- Sizing guides. For any product where fit matters, a detailed sizing guide with measurements reduces "wrong size" returns significantly.
- Use-case specificity. Instead of saying a product is "perfect for everyone," state who it is designed for and, equally important, who it is not designed for.
What You Cannot Control
Buyer Behavior
A percentage of marketplace buyers will return products regardless of how good the listing, product, and packaging are. They buy multiple sizes to try at home. They order impulsively and change their minds. They use the product for a specific event and return it after. This behavior is built into the marketplace model, and platforms like Amazon actively encourage it through lenient return policies because it drives buyer confidence and purchase volume.
You cannot prevent this behavior. You can only account for it in your margin calculations. If your product category has a baseline return rate of 8%, your per-unit economics need to absorb that cost and still generate profit. If they cannot, the problem is your pricing or your cost structure, not buyer behavior.
Marketplace Policy Changes
Amazon and Walmart regularly adjust their return policies, sometimes with minimal notice. Amazon's expansion of free returns across more categories, the introduction of returnless refunds for low-value items, and changes to the return window during holidays all directly impact seller economics.
When Amazon decides that returns under $75 in your category qualify for returnless refunds, meaning the buyer keeps the product and gets a full refund, your per-unit loss on those returns doubles. You absorb both the refund and the lost inventory. You have no input into this decision and no ability to opt out.
The operational response is to monitor policy changes, model their impact on unit economics, and adjust pricing or advertising strategy accordingly. Build margin buffers that account for policy shifts. If your product is only profitable at a 3% return rate and the category average is 10%, you are one policy change away from losing money on every unit.
Fraudulent Returns
Return fraud exists on every marketplace. Buyers return different items than what they purchased, return used items as new, or claim non-receipt of products that were delivered. Amazon and Walmart have fraud detection systems, but they are imperfect, and the platforms generally err on the side of the buyer.
You can report suspected fraud through seller support channels. Amazon's SAFE-T claims process allows sellers to file for reimbursement when a return is clearly fraudulent. The success rate varies, and the process is time-consuming, but it is worth pursuing for high-value items.
What you cannot do is prevent fraud from occurring. Building a reimbursement claim process into your regular operations ensures you recover what you can without spending disproportionate time on individual cases.
Strategies to Reduce Return Rates
Analyze Return Data Monthly
Amazon provides return reason data at the ASIN level. This data is your most valuable tool for reducing returns. Categorize returns by reason, identify patterns, and take action on the top three return reasons for each product.
If "item not as described" is your top return reason, your listing needs work. If "defective" is the top reason, you have a quality control problem. If "no longer needed" or "bought by mistake" dominates, your return rate is driven by buyer behavior that you cannot change, but you may be able to improve your targeting to attract more intentional buyers.
Use Insert Cards Strategically
A small card inside the product packaging that provides setup instructions, tips for best results, or contact information for customer support can reduce returns driven by confusion or minor issues. A buyer who cannot figure out how to use a product will return it. A buyer who has clear instructions and a way to ask for help may keep it.
Note: Amazon's policies restrict what insert cards can say. You cannot ask for reviews, direct buyers to your own website for purchases, or offer incentives. You can provide usage instructions and customer support contact information.
Monitor and Respond to Reviews
Negative reviews often correlate with return reasons. A review that says "much smaller than expected" tells you the same thing as a return coded "item not as described." Monitoring reviews, addressing concerns in listing updates, and responding professionally to negative feedback all contribute to reducing future returns.
Invest in Prep and Inspection
For brands using a marketplace distribution partner or a prep service, the quality of inbound inspection directly impacts return rates. Every damaged or defective unit caught during prep is a return prevented. The cost of thorough inspection is consistently lower than the cost of processing returns.
Handling Returned Inventory
Returned inventory needs a disposition process. For FBA returns, Amazon grades the item as sellable or unsellable. Sellable returns go back into your available inventory. Unsellable returns sit in your account as unfulfillable inventory, accruing storage fees until you create a removal order.
Options for unfulfillable inventory:
- Return to your warehouse for inspection and potential resale as open-box or refurbished
- Dispose through Amazon's disposal service (a small per-unit fee)
- Liquidate through Amazon's liquidation program (you receive a fraction of the sale price)
- Donate through Amazon's FBA Donations program
The right choice depends on the product value and the cost of return shipping. For products under $10, disposal or liquidation usually makes more sense than paying return shipping. For products over $30, getting the inventory back and inspecting it for resale potential is often worth the cost.
Build a monthly cadence for reviewing unfulfillable inventory and processing removal orders. Letting returned inventory sit in Amazon's fulfillment centers generates unnecessary storage fees and drags down your IPI score.
If you want an assessment of how your current return rates compare to category benchmarks and where the opportunities for improvement are, request a Snapshot. For brands ready to work with a partner who manages returns as part of a comprehensive marketplace operation, apply here or reach out directly.
FAQ
What is a normal return rate on Amazon?
Return rates vary significantly by category. Apparel and shoes typically see return rates of 15% to 30%. Electronics and home goods generally range from 5% to 15%. Consumables like food and supplements tend to be lower, often 2% to 5%, because buyers cannot return opened consumable products in most cases. Compare your return rate to your specific category average, not to marketplace-wide averages, to determine whether your rate is acceptable.
Can I opt out of Amazon's free return shipping policy?
No. For FBA orders, Amazon controls the return process, including whether return shipping is free. For seller-fulfilled orders, Amazon sets the return shipping policy based on the return reason. If the return is due to an Amazon error or a defective product, return shipping is always free to the buyer and charged to the seller. Some categories require free return shipping for all reasons. This is a cost of selling on the platform.
How do I file a reimbursement claim for a fraudulent return?
Use Amazon's SAFE-T (Seller Assurance for E-commerce Transactions) claims process in Seller Central. Navigate to Orders, then Manage SAFE-T Claims, and file a claim with documentation showing that the returned item does not match what was originally shipped. Include photos of the returned item, the original shipment record, and any other evidence. Claims must be filed within the allowed timeframe, and Amazon's decision is generally final, though you can appeal once.
Should I use Amazon's returnless refund option?
Returnless refunds make sense for low-value items where the cost of return shipping and processing exceeds the product value. If your product costs $5 and return shipping plus processing costs $8, a returnless refund saves you money even though the buyer keeps the item. Amazon allows sellers to set returnless refund thresholds by category. The risk is that it may slightly increase return requests from buyers who know they get to keep the product, but for low-value SKUs, the math usually favors returnless refunds.